Housing (Replacement of Terminated Tenancies) (Successor Landlords) (England) Order 2009

We are today considering the draft Housing (Replacement of Terminated Tenancies) (Successor Landlords) (England) Order 2009, which is intended to extend the provisions in the Housing and Regeneration Act 2008 that deal with tolerated trespassers so that they apply to situations where there has been a change of landlord. "Tolerated trespasser", as noble Lords will remember from the debate on the Housing and Regeneration Bill, is a term that the courts have coined to describe people who have lost their legal status as a tenant after the court has granted the landlord a possession order but whom either the landlord or the court is allowing to remain in the property. This will usually be on certain conditions, such as that the occupant continues to pay the current rent plus a weekly sum towards arrears of rent. In the vast majority of cases, these are people in social housing. The loss of tenancy status causes serious problems not just for the ex-tenant but for their former landlord. This is because neither can rely on the terms of the tenancy agreement, which no longer applies, or on the provisions in the relevant housing legislation. I will return to what that means in practice. Schedule 11 to the Housing and Regeneration Act prevents the creation of further tolerated trespassers in the future. It also remedies the position for the vast majority of existing tolerated trespassers. We debated this at some length and it commanded the full support of all parties. Part 1 of Schedule 11 ensures that in future, where a person is subject to a possession order, they will continue to be a tenant until they are finally evicted from the property. Part 2 restores tenancy status to existing tolerated trespassers. This applies to all ex-tenants who remain in their homes, with one exception, which we are dealing with today. The exception relates to occupants whose landlord changed after they lost their tenancy status. It is this gap that the draft order seeks to fill. Perhaps I may put this in context. It is a complex issue and I am blessed with a very straightforward speaking note, thanks to official advice. By far the most usual situation in which there is a change of landlord is where the property transfers from a local authority to a registered social landlord—an RSL housing association—which usually happens as a result of large-scale voluntary transfers. It could also happen where one RSL takes over the stock of another or where one local authority is substituted for another, for example as a result of boundary changes, although these are likely to be rare. Noble Lords will remember that at Report stage of the Housing and Regeneration Bill the noble Baroness, Lady Hamwee, who is not in her place, introduced an amendment that would have dealt with the stock transfer situation by providing transferring tolerated trespassers with an assured tenancy. However, instead of dealing with the transfer issue in the Act, as she proposed, it was decided to add a power to provide by order for the provisions relating to existing tolerated trespassers in Part 2 of Schedule 11 to be extended to the stock transfer situation, after seeking landlords’ views on this issue. That is why we are debating this order. It was agreed that it would not be appropriate to make these significant changes without first taking into account the views of those landlords who would be affected by them. Since then, we have consulted on options for using the order-making power. The outcome of the consultation was unanimously in favour of amending the legislation to restore tenancy status to those ex-tenants whose landlord has changed. It might be helpful to consider what happens to occupants when local authority stock is taken over by an RSL following a large-scale voluntary transfer. Existing tenants, who as local authority tenants will normally have a secure tenancy, will have a new assured tenancy under the new RSL. This is because RSLs cannot grant secure tenancies. However, the position with occupants who have lost their tenancy status before they transfer is not as clear. It is likely that practice varies from one RSL to another. The fortunate ones will be offered a new full assured tenancy, putting them in the same position as transferring tenants. Alternatively, the RSL might decide to give them only an assured shorthold tenancy, probably on the understanding that it will turn into a full assured tenancy if the person continues to comply with the conditions in the possession order. However, it has been confirmed to us as a result of the consultation exercise that, sadly, some RSLs fail to offer any form of tenancy to some, or in some cases all, of the occupants who transfer to them as tolerated trespassers. This may depend on the level of rent arrears or the seriousness of the breach that led to the possession order. We estimate that as many as 70,000 to 85,000 local authority tenants could have lost their tenancy as a result of a possession order and have then been transferred to an RSL in a stock transfer situation. We do not know how many of these have not been given a new tenancy by the RSL and, therefore, continue as tolerated trespassers. However, we think that the number could be quite considerable. Where there has been no change of landlord, it is not uncommon for people who have lost their tenancy following a possession order to continue living in their homes for years without realising that they are no longer tenants. This is one of the grey areas of this type of situation. The issue may come to light only when they seek to enforce their tenancy rights. I will cite a couple of imaginary cases which I think will help noble Lords to understand the situation. Mrs Green has been subject to a possession order since 2001, but by and large has continued to keep up with the repayment terms in the order. She realises that she is no longer a tenant of the local authority only when she tries to get the council to do something about the rampant mould and damp in the kitchen and bathroom and the council points out that it no longer has any statutory or contractual duty towards her. A second example is Mrs White, whose true situation comes to light only when she dies and her daughter, who has always lived with her mother and has cared for her, finds that she cannot continue to live in her home after her mother’s death because she cannot succeed to the tenancy under the normal rules, as technically her mother no longer had a tenancy. This would obviously be very difficult for the tenants in question to deal with. The situation is different where there is a change of landlord. In another example, if Mr Gray and his wife are not already aware that they lost their status as tenants after the council took out a possession order against them, they are likely to realise that something is amiss when, following transfer of their home to Trumpton Housing Association, their neighbours are signed up to a new tenancy but they are not. Ex-local authority tenants who transfer to a new RSL are more likely to become aware of their altered status. However, the practical effect of being a tolerated trespasser will be just the same whether they are aware of it or not. Why does it matter that an occupant has lost their status as a tenant? The examples that I have given illustrate that, for ex-tenants, probably the most serious consequences are that neither their spouse nor their children will be able to succeed to the property on their death and that the landlord is under no contractual obligation to repair or maintain the property. For the landlord, the picture is more mixed. We can probably see potential benefits in the existing situation, such as the absence of the repair obligation, although it seems doubtful that landlords would allow their properties to fall into serious disrepair whatever the status of the occupant. Transfer landlords have the advantage of being able to choose whether to provide tenancy—and, if so, what sort of tenancy—to occupants who transfer as tolerated trespassers. There are disadvantages, too. It is unclear whether landlords can charge annual increases in rent from people who are not tenants or whether such people should be allowed to vote in tenant management ballots. Those who responded to the consultation exercise generally felt that the disadvantages to landlords of allowing the existing uncertainty to continue outweighed any theoretical potential advantages. That is the context of the order. The order restores tenancy status to ex-tenants whose landlord has changed by creating a new tenancy between the transfer landlord and the occupant. The tenancy will start immediately and automatically on the date on which the order comes into force. There will be no legal requirement on the landlord to issue a formal tenancy agreement, as the new tenancy will arise automatically on the commencement date. However, to ensure that tenants are informed, we will issue guidance to landlords to the effect that they should issue former tolerated trespassers with a document as soon as possible after commencement of the order. This document will serve the dual purpose of notifying the person that they have a new tenancy and confirming the terms of the new tenancy. Our aim has been to provide wherever possible that the new tenancy created by the order is of the same type as, or as near an equivalent as possible to, the original tenancy. This is in line with the provisions in Part 2 of Schedule 11. However, where there has been a change of landlord, and particularly where the nature of that landlord has changed, we recognise that this may not always be possible. In the case of a stock transfer, a tolerated trespasser who was formerly a local authority secure or introductory tenant under the Housing Act 1985 cannot continue with his previous tenancy type but must become an assured tenant of the RSL under the Housing Act 1988. This is because of the mutually exclusive provisions on landlords of secure and assured tenancies in the two Acts. While the other forms of transfer—that is, between local authorities or between RSLs—are likely to be rare, as I have said, we have provided for these in the order as well. For example, where the original and the new landlord are both local authorities, the new tenancy will be the same as the original tenancy, in all but one case, which is where the original was an introductory tenancy but the new local authority landlord does not operate such a regime. In that case, the new tenancy will be a secure tenancy. The draft order also provides for the terms and conditions of the new tenancy to be the same as the original one, subject to any modifications that may be needed to reflect the fact that, in the stock transfer situation, the two tenancy types are different. Our aim in drafting the order has been to ensure that it does not disadvantage landlords or tenants. For example, it has been drafted to ensure that no new statutory succession rights will be created. However, there is nothing to prevent a successor landlord from voluntarily offering new succession rights as a term of the tenancy agreement if they wish to do so. We are giving the courts a power to allow claims to be brought between the newly restored tenant and either the original landlord or the newly restored transfer landlord relating to the period when the occupant was a tolerated trespasser. In so doing, the order aims to reproduce as far as possible the provisions in Schedule 11 that give the court discretion over whether to allow such claims. The provisions in Schedule 11 are in turn designed to continue the discretion that the courts currently have to allow such claims. I should make it clear that the order will apply only to occupants who are still tolerated trespassers on the date when the order comes into force. Where the transfer landlord has taken action to deal with the situation before the commencement date, whether by issuing a new tenancy or by proceeding to eviction, the order will have no effect. Should noble Lords approve the order, both it and Schedule 11 will be brought into force at the same time. Noble Lords should know that we have delayed the commencement of Schedule 11 because, due to the complexities of this area of law, which have been self-evident in the way in which I have had to describe the order itself, it was felt essential to make all changes at the same time for the sake of all concerned: landlords, tenants, their advisers and the courts. The Secretary of State will be commencing Schedule 11 for England and Wales. The Welsh Assembly Government are working in parallel to introduce an affirmative order in the same terms as the one that we are considering today. If all goes according to plan, the Welsh order will also come into force on the same date as Schedule 11. Noble Lords may be reassured to know that, as I have mentioned, it is our intention to provide non-statutory guidance to assist landlords in implementing the tolerated trespasser provisions in the 2008 Act and the affirmative order. We will ensure that that is available as soon as possible after the provisions come into force. For those of us who survived the Housing and Regeneration Bill, it is good that we are now at a point where we are putting into law the commitments that we made to make life better for people who are very vulnerable by making this secure for them. I hope that noble Lords will feel able to support the order. I beg to move.